Recordati Industria Chimica e Farmaceutica S.p.A.

Good afternoon. This is the Coral School Conference Operator. Welcome and thank you for joining the Recordati Investors Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Miss Federica De Medici, Investor Relations and Corporate Communications of Recordati. Please go ahead, madam.

Thank you, Sabrina, and good afternoon or good morning, everyone, and thank you for attending the Recordati conference call today. I'm pleased to be here with our CEO, Andrea Recordati, and Luigi Lacorte, our CFO, that will be presenting the fourth quarter 2021 results. and the strategy and outlook update for the next three years. They will be running you through the presentation. As usual, the set of slides is available on our website under the investor section. After that, we will open up for Q&A. I will now leave the floor to Andrea. Please go ahead.

Good afternoon, ladies and gentlemen, and thank you for having joined us for the Recordati first quarter 2021 results and the three-year plan update investor presentation. So please move to the second slide, the agenda. The agenda today will take us through our company overview and strategy, our 2021 first quarter results, the key assumptions around the drivers for organic growth, a focus on further growth opportunities, internal and external, and finally, our financial projections for the next three years. So if you can please turn to the first slide of the presentation, slide number three. So let me start with Recordati in a snapshot, in one page, for those of you who don't know our company, to give you a quick profile of Recordati and where Recordati is today. An international specialty farmer group with its roots and legacy in Italy that has successfully grown in international markets, mostly through acquisitions and business development over many years to the point that Italy now counts less than 20% of revenue. We manage the business through two business units, SPC, which stands for specialty in primary care, that accounts for 78% of revenues and includes RX, OTC, and fine chemicals, and our rare disease business unit, which is mainly focused on the treatment for metabolic deficiencies and rare endocrine conditions, that accounts for 22% of revenues but accounts for more than 25% of consolidated EBITDA. Our SPC legacy is in cardiovascular, but we're also present in a number of other therapeutic areas, such as urology, gastrointestinal, anti-infectives, to mention the key ones. We have a well-diversified footprint and strong vertical integration with eight manufacturing facilities, of which two are API production sites, and one is specialized packaging and distribution facilities dedicated to rare diseases. This diversification has served us well in 2020 during the COVID-19 pandemic. Although we were not immune from the impact that COVID had on several categories and markets, our organization was quick to react, ensuring continued availability of our products and the safety of our employees. Despite the disruption, we were able to deliver revenues which were broadly flat versus the prior year and EBITDA and adjusted income that were very closely aligned with the targets that we had set at the beginning of 2020. Moving on to the next slide. Those of you who are more familiar with the business would know that we have a relatively straightforward and successful proven business model, which is summarized on this slide. We are a unique company with a very broad portfolio and geographical footprint that minimizes exposure to single products and markets, and therefore limited exposure to single reimbursement systems. Organic growth is primarily fueled by volume-driven growth rather than price and good exposure to markets with positive long-term growth outlook such as in North America, Latin, Turkey, Russia, North Africa to mention a few. A proven successful strategy of stabilizing key products post loss of exclusivity through active promotion and no major corporate products facing LOEs over the next five years. We are a fully vertical integrated platform from API to commercialization for key products, driving margin and protecting the supply chain. We have approximately 60% of volumes manufactured by Recordati plants. We minimize R&D risk with selective investments, with the majority of our net revenue coming from mature products and products sourced externally via licensing and business development activities. And finally, we have a strong and proven M&A track record to complement and strengthen our portfolio and geographical footprint, but with a very disciplined approach and a long-term focus on value creation, always pursuing a mix of growth and accretive deals. Moving on to slide five, our business model has delivered a consistent history of growth and margin improvement. As shown in this chart, revenue cargo for the past 10 years was plus 7%. and this was achieved through a well-balanced mix of organic and inorganic development. We consistently improved our profitability with strong margin expansion from 25% EBITDA to over 38% target that we had set in our prior three-year plan, reaching 39% in 2020, a margin result which, however, let me remind you, we know was enhanced by the impact that the COVID pandemic has on revenues, but also on the cost base of a company. Moving on to the next slide. So we are planning to keep on doing this in the years to come, maintaining a strategy de facto unchanged from the last restoration of a three-year plan that we presented in 2019. For those, in fact, that are familiar with our company, you may recognize that this strategy slide is fundamentally the same as the one that we shared in May 19. a strategy that we believe remains valid today going forward. We've also confirmed the continuation of our successful strategy with a steady organic growth generated by a well-diversified portfolio and a balanced exposure to emerging markets, enhanced by a creative and strategic deals in both SPC and rare diseases, and leveraged on our capabilities across both businesses. As you can see from the bottom of the slide, we also feel that as a group, we are well positioned and exposed to positive macro trends driving our relevant markets. Moving on to the next slide. In Recordati, we believe that integrating corporate responsibility into our business approach and strategy by uniting economic, social, and environmental aspects will create long-term value for all creation, for all relevant stakeholders. Our commitment to this is summarized in this slide. Given the growing importance of sustainability issues within the company dynamics, we have created a dedicated environmental, social, and governance ESG function with a task of integrating and managing sustainability as an integral part of all the activities and initiatives of the RecordLati Group. Our sustainability strategy is based on five priority areas. For all of them, we have defined specific commitments. Regarding patient care, our attention is focused on access to medical products, quality, product safety, and R&D. As for employees, we're committed to creating even more a safe, responsible, and inclusive workspace. We consider also very important supporting local communities. We want to take conscious action to reduce our environmental impact fighting against climate change, increasing the circular economy, and promoting waste reduction initiatives. Concerning responsible sourcing, we're committed to constantly promoting respect for ESG aspects along the entire value chain. And finally, integrity is our founding value, and we are committed to maintain the highest standards of ethical products. Our remuneration policy is closely involved in our sustainability plan. In order to have a strong commitment, we have included also the sustainability target in our group's management by objective system. The plan represents how we want to create sustainable and shared long-term value. You can move to the next slide, please. So now before we actually move to the three-year plan presentation, I will leave the floor to Luigi to present the 2021 first quarter results. Thank you, Luigi.